We model (a) transmission tariff at R1,125/1,200/mscm in FY16/FY17 v/s actual 1,113/mscm in FY15 and (b) volumes at 25.5/27.5mmscmd in FY16/FY17 v/s actual 23mmscmd in FY15.Medium term risk is some volumes (~5mmscmd) going away once RIL starts its petcoke gasification project. While, PNGRB tariff revision is an upside risk to our estimates and 10% tariff increase could increase our FY17 EPS by 8%.

2QFY16 transmission volumes were below expectations at 24.3mmscmd (est. 26.5mmscmd; flat YoY, +1% QoQ) despite incremental volumes from power sector (increase could be towards end of the quarter). Implied transmission tariff was below estimate at Rs 1,068/mscm (est Rs 1,130 and v/s Rs 1,126/mscm in 1QFY16) and could be due to 50% lower tariffs for incremental volumes for power sector under government’s scheme.

GSPL is the 2nd largest gas transmission company in India with 2,239Kms of high pressure gas pipeline network and 31mmscmd of firm GTAs for gas transmission to various industries and CGD networks in the state of Gujarat. GSPL’s parent, GSPC owns 37.7% stake in GSPL.